Craft Beer Grows Up

January 18, 2016

2015 was a momentous year for craft beer. What was once just a plucky upstart in the beer industry has become a mature player. Craft beer won't be ignored, and major retailers and established players in the industry are beginning to pay attention to it for the first time.

Craft beer is expanding—and it is doing so at a rapid rate. There are now more than 4,100 craft breweries in operation in the United States, the first time the number of craft breweries has surpassed the historic high set in 1873. The craft beer market will continue to thrive well into the foreseeable future. But the best way to measure the expansion of the craft beer category is to examine the state of U.S. hop production. The surging demand for hops from craft breweries led to an astounding 11 percent increase in U.S. hop production in 2015.

Craft beer is truly shaking up the staid beer market, and it's got the established beer conglomerates running scared.

When writers, critics, and craft beer aficionados look back on 2015, the most salient trend they'll notice will be that the category's rapid expansion was accompanied by a corresponding consolidation. For the beer industry, the biggest story of 2015 was the surge of craft brewery acquisitions by giant global brewers.

While it's true that scores of new breweries opened around the country, many established brewery owners found ways to transition their companies out of the increasingly crowded and competitive marketplace.

You could react to this development in two ways. You could bemoan the fact that mega-breweries are now moving into the craft beer sector, gobbling up smaller independent breweries instead of trying to compete with them. Or you could see it as the first signs of a consolidating, maturing industry.

We prefer to take the optimistic view.

Craft beer, once ignored by the major brewers, has gained their respect—and it's upending their old-fashioned, conservative business models. Without a doubt, the mega-breweries are going to continue focusing on their craft segments in the coming years, probably by throwing billion-dollar checks at their smaller independent competitors.

That doesn't mean that the big brewers can beat craft breweries by eliminating the whole pesky craft category. Craft breweries are responding to consumer desires, and the major brewers need to address those if they are going to rescue their flat-lining businesses.

Craft beer has unleashed a consumer revolution that will transform the beer industry. Its rapid expansion, which saw it double its share of sales in the past five years, will continue into the future, even as it consolidates its gains.

We're looking forward to seeing how craft beer matures in 2016. It's sure to be another eventful year.

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